Fraternity Chief Feared for Son as Hazings Spurred JPMorgan Snub

Bradley Cohen, national president of the Sigma Alpha Epsilon fraternity, in front of the Greek letters for the organization, stands outside the chapter house at University of California at Irvine. Earlier this month, Cohen announced an end to pledging, the months-long initiation period when members have been subject to hazing. Photographer: Patrick T. Fallon/Bloomberg

March 27 (Bloomberg) -- Early this month, JPMorgan Chase &
Co. stopped managing an investment account for a prominent
client: the charitable foundation of Sigma Alpha Epsilon, one of
the U.S.’s largest fraternities.

The bank was concerned about SAE’s bad publicity, according
to Anthony Alberico, a JPMorgan vice president who dealt with
the foundation. SAE has had 10 deaths linked to drinking, drugs
and hazing since 2006, more than any other fraternity.

The snub by the largest U.S. bank validated a startling
decision that Cohen, seeking to protect future members, had
already reached. On March 7, the same day JPMorgan formally cut
ties with the fraternity, the 51-year-old Cohen announced an end
to one of SAE’s defining traditions: pledging, the months-long
initiation where recruits sometimes fall prey to brutal hazing.
The move catapulted Cohen into national prominence and drew
criticism from alumni such as Texas oilman-turned-investor T.
Boone Pickens. SAE became one of only a handful of 75 national
fraternities to eliminate pledging.

“How much longer can we sustain these losses -- loss of
life, loss of credibility to those who join and drop out because
they were lied to, loss of valuable resources and loss of our
reputation as leaders and as true gentlemen,” Cohen told SAE
brothers this month at the University of La Verne in California
during his first public address since the announcement.

Secret Handshake

Cohen, who took office only nine months ago, faced intense
pressure to change the culture of SAE, according to him and
other top fraternity officials. Besides JPMorgan, Lloyd’s of
London was threatening to cancel SAE’s insurance coverage
because of injuries, deaths and lawsuits.

Family considerations also motivated Cohen. He wanted to
protect his older son, Devon, a high school freshman who is
determined to join SAE in college. Devon wears bow ties in
purple and gold -- SAE’s colors -- and knows its secret
handshake.

“I don’t want him to be scarred mentally from hazing,”
said Brad Cohen, relaxing with his family in their home near Los
Angeles. “I don’t want him to want to join SAE so badly that
he’ll do anything he’s told.”

Backlash Stirred

Cohen’s pledging ban has stirred a backlash from some
student and alumni members of SAE, which was founded at the
University of Alabama in 1856 and has more than 240 chapters and
14,000 college members. Cohen, who must step down at the end of
his term next year, took the chance that traditionalists could
unseat his allies on the board at the fraternity’s next
convention in 2015, he said.

Renowned as a Wall Street pipeline, SAE boasts prominent
alumni such as hedge fund managers David Einhorn of Greenlight
Capital and Paul Tudor Jones of Tudor Investment Corp. Pickens,
whom Cohen consulted before announcing the pledging ban, said
through a spokesman that he has reservations about it.

“Mr. Pickens believes pledgeship is a key part of
fraternity life and helps those who go through it gain an
appreciation for the rich history tied to each fraternity,”
spokesman Jay Rosser said in an e-mail. Pickens supports a
“greater focus” on alcohol and drug awareness, Rosser said.

“Either way, he appreciates the tough choice Brad Cohen
has made,” Rosser said. “Time will tell if it was a good
one.”

SAE chapters will still extend recruits a “bid,” or
invitation to join. But students who accept will become full
members almost immediately. They will be required to complete
additional training, including alcohol education.

‘Insta-Bros.’

Angry student members are deriding those inducted
immediately into the order as “insta-bros.” They also question
whether the SAE board has authority under its bylaws, as Cohen
maintains, to impose the ban on local chapters. Their posts
warning that brotherly bonds will fade or pledging will go
underground pack a Facebook page called “SAE Cause for
Change.”

“Doing away with the pledge program is like giving all the
kids on a youth soccer team trophies at the end of the season
for doing ‘a good job,’” one critic wrote. “People need to
face adversity in order to feel accomplished.”

E-mails and phone messages praising Cohen’s move poured in
from administrators, fraternity members and families affected by
hazing.

‘Brave Leader’

“We feel like he’s a strong, brave leader for taking this
organization forward,” said Scott Starkey, who called Cohen to
applaud the decision. Starkey’s son, Carson, died of alcohol
poisoning in 2008 as a freshman during an SAE hazing at
California Polytechnic State University in San Luis Obispo.

The son of an Olympic athlete, the 6-foot-1-inch Cohen has
a square jaw and a commanding presence. Owner and chief
executive officer of a real estate company based in Newport
Beach, California, he has spent almost 30 years in volunteer
leadership roles at SAE. His brother and nephew belong to the
order, and his father was an honorary member. Cohen counts his
induction into SAE among the most meaningful ceremonies of his
life, along with his wedding and the naming of his three
children. SAE awards cover the walls in his study.

He tries to live by SAE’s “perfect” creed, the “True
Gentleman,” which all members must memorize, he said. It is a
kind of golden rule of fraternity life, which begins: “The true
gentleman is the man whose conduct proceeds from good will and
an acute sense of propriety, and whose self-control is equal to
all emergencies.”

Unusual Background

In many ways, Cohen has an unusual background for an SAE
leader. He’s the first Jewish president of SAE, which used to
limit membership to “members of the Caucasian race” without a
parent who was a “full-blooded Jew,” according to a 1903 book
of rituals.

Holding the black volume aloft, Cohen read that passage to
his audience at the University of La Verne. When SAE renounced
racism and anti-Semitism in 1952, he reminded the crowd, it
faced the same complaints that change would ruin the fraternity
that traditionalists now make about the pledging ban.

A Type 1 diabetic diagnosed at age 11, Cohen abhors forced
drinking, which is often part of fraternity hazing. He worries
that alcohol consumption, which can wreak havoc on a diabetic’s
blood-sugar levels, endangers students with all kinds of health
issues. Cohen, who wears an insulin pump, serves on the
executive board of the University of California at Irvine
diabetes research center. His son, Devon, also has the disease
and held a diabetes fundraiser for his bar mitzvah in 2012.

South Africa

Cohen is also SAE’s first foreign-born leader, and speaks
in the lilting accent of his native South Africa. His late
father, Desmond Vernon Cohen, was an obstetrician-gynecologist,
as well as a swimmer and water polo player on two South African
Olympic teams.

Fearing racial strife over the government’s apartheid
policy, the family left South Africa in the late 1970s when
Cohen was 16. When he announced the pledging ban, Cohen compared
the treatment of new members as “second-class citizens” to the
abuse of blacks under apartheid.

Feeling lost and alone as a foreign student at the
University of Arizona, Cohen helped alumni reopen the SAE
chapter there. It had been shut down years before for hazing,
including branding pledges on their buttocks with “Phi Alpha,”
the SAE salutation and motto, Cohen said.

Leopard Print

While Cohen’s pledging didn’t include physical hazing, he
was subjected to practical jokes, such as taking a fake national
exam, he said. Once initiated, he made lifelong friends. In his
study, he flips through old photos of himself with his
fraternity buddies, including one at a party where he is dressed
as a Zulu warrior, in a scanty leopard-print outfit.

After graduating from Arizona with a bachelor’s in
psychology and business administration in 1985, Cohen worked for
two years at SAE’s headquarters in Evanston, Illinois. As
director of expansion, he helped establish more than 20 new
chapters, including one at Yale University in New Haven,
Connecticut.

Cohen moved to Southern California in 1988. After a stint
at Xerox Corp., he started working in the title insurance
business. In 2009, he opened his own company, Granite Escrow
Services Inc., which has annual revenue of more than $10
million, almost 100 employees and seven offices.

Hazing Tragedies

By then, Cohen had joined the Supreme Council, SAE’s
governing board. He was also increasingly dismayed by hazing-related tragedies, including Starkey’s death after downing beer,
rum and 151-proof liquor in an initiation ritual.

His wife, Kim, a former singer and actress who is also from
South Africa, shared his concerns. Devon and their younger son,
Zachary, wouldn’t have been allowed to join certain SAE chapters
before pledging was eliminated, she said. “As a mother, I would
have been scared to put them in an environment like that.”

As Cohen rose through SAE’s ranks, he pushed for a more
comprehensive safety program, called “Minerva’s Shield,” which
includes rules about alcohol and sexual consent, as well as a
prohibition on hazing. It was adopted in 2004.

Still, universities have disciplined more than 100 SAE
chapters since 2007, some repeatedly, according to a list
published on the organization’s website as a result of a legal
settlement. Colleges suspended or closed at least 15 SAE
chapters in the past three years. In 2011, a sophomore pre-medical student at Cornell University died from alcohol
poisoning after being blindfolded by SAE pledges in an
initiation ritual.

Supreme Archon

Last June, when Cohen became president -- or officially,
Eminent Supreme Archon -- he signaled his commitment to
significant change by backing a proposal to ban alcohol in
chapter houses. At the convention in Chicago, it failed to get
the two-thirds vote needed to pass.

Cohen settled for a symbolic step. The council told
chapters to stop using the word pledge and refer to recruits
simply as “new members.” The goal was that they would be
treated more humanely.

Cohen should have continued to focus his fight on alcohol
abuse, said Nicholas Syrett, an associate professor at the
University of Northern Colorado and author of a book about the
history of fraternities. Ending pledging “doesn’t seem like it
will change anything about the binge drinking at parties that
doesn’t have anything to do with pledging,” Syrett said.

Insurance Risk

As deaths and injuries mounted, Lloyd’s of London became
increasingly concerned about the risk of insuring SAE. It
threatened to drop coverage because the fraternity poses too
great a risk, according to Gregory Brandt, a state judge in
Iowa, and Steven Churchill, executive director of the American
Medical Association, both SAE council members. Loss of coverage
could shut down SAE, they said.

The Lloyd’s warning was a turning point that “changed the
way” SAE officials viewed the fraternity’s “future
viability,” Churchill said.

Members already pay a base fee of $340 a year for liability
coverage, among the highest rates of any fraternity. The SAE
national’s deductible is $1.5 million a year, Cohen said.

Media pressure on SAE also mounted. A December Bloomberg
News article, which called SAE the “deadliest fraternity,”
revealed previously unreported hazing at Salisbury University in
Maryland.

German Rock

During an eight-week initiation in 2012, SAE brothers at
Salisbury forced pledges to drink until they almost passed out
and demanded they recite the True Gentleman pledge wearing only
their underwear while standing in trash cans filled with ice,
Bloomberg reported.

Fraternity members confined recruits for as long as nine
hours in a dark basement without food, water or a bathroom,
while blasting the same German rock song at ear-splitting
volume, according to two former pledges and the findings of the
university’s disciplinary board.

In the wake of the Bloomberg article, Cohen asked Dwight
“Duke” Marshall, the volunteer alumni adviser for SAE’s
Salisbury chapter, about what happened in the basement. Marshall
said brothers had played the music only to prevent pledges from
hearing secret SAE rituals taking place upstairs, according to
Cohen.

Cohen fired off an e-mail to Marshall and other alumni that
likened confining students in the dark, amid deafening German
music, to something out of Auschwitz, the Nazi death camp.

Taking Offense

“I take offense to that as a Jew,” he remembered saying
in the e-mail. “I take offense as a member of SAE.”

Marshall and others downplayed the seriousness of hazing at
Salisbury to the national fraternity, Cohen said. On Feb. 2, SAE
suspended the chapter’s charter and said brothers will lose
membership privileges. The university has suspended the chapter
through the summer of 2015.

In an interview this week, Marshall said he didn’t mislead
Cohen and found his e-mail offensive. Still, he said he respects
Cohen’s opinion. “He’s our leader,” he said.

Cohen and the rest of the Supreme Council began considering
a pledging ban. At a Jan. 19 meeting in Tucson, Arizona, they
debated the idea and alternatives such as shortening the
initiation period.

The final decision to stop pledging came on a Feb. 3
conference call. Cohen said the council kept its plan under
wraps for fear that hazers would accelerate abuse of pledges
before the program was eliminated.

“How many more new members have to die before everyone is
willing to change the way we operate?” SAE Executive Director
Blaine Ayers said in an e-mail.

Bank’s Rebuff

A rebuff from an unexpected quarter reaffirmed the
council’s resolve. SAE’s charitable foundation had an investment
account with New York-based JPMorgan containing about $500,000,
which was primarily used to make payments on a loan and
occasionally to sell stock gifts. The account dated back to the
mid-2000’s, Cohen said.

Then, in February, JPMorgan said that it was reconsidering
the relationship to avoid tarnishing its reputation, according
to Todd Buchanan, vice president of the foundation and one of
Cohen’s predecessors as SAE’s leader.

“It was shocking,” Buchanan said. “It really spoke to
why we needed to make a stand. We’re better than this.”

The bank, which has said it would pay more than $23 billion
to resolve regulatory and criminal investigations, has cut ties
since last year with about 2,000 clients that could attract
scrutiny, according to a person with knowledge of the matter.
Emily Sackett, a JPMorgan spokeswoman, declined to comment.

Terminated Ties

Cohen and Buchanan said they learned March 6 that JPMorgan
had decided to quit doing business with SAE’s foundation. On
March 7, the bank sent a letter terminating the relationship.
That day, Cohen announced the pledging ban.

“As an organization, we have been plagued with too much
bad behavior, which has resulted in loss of lives, negative
press and large lawsuits,” he said in a video address.

A week later, during a student leadership conference at the
University of La Verne, Cohen milled around with undergraduates
from chapters across Southern California. Some admired his
purple and gold tie, adorned with tiny phoenixes.

“We’re like the Phoenix,” Cohen told them. “We’re rising
from the ashes.”

Filing into the arena under a huge American flag, SAE
brothers wore khakis, blazers and crisp white shirts, and ties
in the fraternity’s colors. Sorority women in high heels acted
as hostesses.

‘Guiding Light’

The brothers shouted the SAE motto, “Phi Alpha,” before
joining in a medley of fraternity songs, filling the arena with
rich baritones: “And to Phi Alpha with its guiding light, And
to the lion who will fight, fight, fight.”

For half an hour, Cohen made his case that the Supreme
Council had no choice but to ban pledging:

“No parent should ever have to suffer the loss of a child
because that child was simply trying to join a fraternity -- our
beloved fraternity, where we claim to be true gentlemen.”

After the speech, Alexi Sciutto, who just graduated from
California State University at Northridge, buttonholed Cohen to
offer support. His SAE brothers helped him cope with his
mother’s death from breast cancer, he said.

“I’ll do whatever needs to be done to keep SAE alive,” he
told Cohen. “And I’ll do it until I die.”

Christian Couch, 21, a junior from California State
University at Long Beach who attended Cohen’s speech, said he
disagreed with the new policy.

‘Easy Out’

“It doesn’t feel right. You just sign up and you’re
automatically in,” he said. “It’s the easy way out.”

After the speech, Cohen joined other fraternity staff and
volunteers in workshops about the revamped program for new
members, called “The True Gentleman Experience.”

Leaning against a wall in a classroom with 25 SAE members,
Cohen said that brothers must still learn rituals, including the
SAE creed. “They don’t need to learn the True Gentleman
standing in a tub of ice, half naked,” he said.

Back in Cohen’s family room, his 14-year-old son, Devon,
said he’s pleased that SAE eliminated pledging. His parents
support his ambition to join the fraternity.